Tuesday, January 5, 2010

One Very Extended Stock to Watch For Reversal

Just wanted to point this stock out as being extremely extended based on my scans (using the moving averages and percentages above those MA's) and very susceptible to a sharp one-day pullback. I don't know even know if I could get shares to short here, but if it has another run tomorrow, maybe with a gap up, I am going to keep it on my watchlist and pay attention to any reversal signals. Luckily, there aren't many stocks that are extended this much so I am hopeful the rally can continue in these small caps for a few more days - just maybe not in this one, particularly if oil stalls near its recent highs.

NEP
Chart from Telechart, Courtesy of Worden Brothers, Inc.

3 comments:

positiontrader said...

I would be careful about shorting this stock and holding it overnight. They are expected to announce acquisition of new leases anytime now. I agree it is overbought but any new leases could make this go way higher.

Good Luck tomorrow!

Mac said...

I know - it would be a day trade and a quick one - just pointing it out. I would not be surprised to see a big one-day drop here soon.

Anonymous said...

Mac, Happy New Year to you and your family! I wonder whether you think SEED's momentum is gone or you think it will make new highs, passing $14.5. Thanks a lot! Elena